Proposed sale of NB Power

The proposed sale of NB Power was an attempted takeover of New Brunswick's government-owned public utility assets by Hydro-Québec, Canada's largest utility. Announced on October 29, 2009 by premiers Shawn Graham and his Quebec counterpart, Jean Charest, the deal ultimately collapsed in March 2010, after months of controversy.[1]

Context
Transmission lines near the Point Lepreau Nuclear Generating Station, in southwestern New Brunswick.

For a decade, NB Power, the government-owned integrated public utility serving most areas of the Canadian province of New Brunswick, was plagued by financial difficulties. Over the years, the company had built and operated a diversified generation mix, including oil and coal-fired thermal, nuclear, and hydroelectric plants. Faced with an aging generation fleet and fuel cost increases, the utility needed to find ways to meet increasing demand for electric power while keeping operation costs down.

In the late 1990s, NB Power signed a supply contract with PDVSA for Orimulsion, a cheap bitumen-based fuel, for its Coleson Cove and Dalhousie facilities. The utility then converted one of three units at the 1050 MW Coleson Cove plant, in Saint John, to burn the heavier grade while burning Orimulsion at Dalhousie. After investing hundreds of million dollars at Coleson Cove, NB Power learned of the Venezuelan supplier's decision to stop making the fuel, thus breaking the contract. After mixed success litigating the case and winning a settlement estimated at more than $200 million, the utility turned to a mix of petroleum coke, an oil refinery byproduct, and heavy oil, drawing opposition from environmentalists.[2]

Meanwhile, NB Power and Bernard Lord's conservative government needed to decide whether to undertake the refit of the Point Lepreau Nuclear Generating Station. The nuclear plant, whose mid-life refit had been hotly debated, was authorized in July 2005, and NB Power signed a $1.4bn contract with Atomic Energy of Canada Limited (AECL).[3] Refurbishment work began in April 2008 and was expected to last 18 months. However, due to a series of delays, the reopening was first postponed in January 2009,[3] then further pushed back.[4] Delays and high fuel costs in 2008 added one million dollars per day to the budget for replacement power. Premier Shawn Graham initiated informal talks on regional electricity issues with Quebec's Jean Charest during a federal-provincial meeting, on 16 January 2009.[5]

The next month, a delegation of senior New Brunswick officials, led by Graham's chief of staff, Bernard Thériault, travelled to Quebec City for secret talks with their Quebec counterparts. In June 2009, the two neighboring provinces announced an "energy partnership". At that point, the option of selling NB Power to Hydro-Québec was largely dismissed. Outside firms were hired to advise the provinces on legal, financial and public relations issues and by September, the parties were discussing the terms of a memorandum of understanding.[5]

First memorandum of understanding

On October 29, 2009, the premiers of New Brunswick and Quebec signed a memorandum of understanding[6] (MOU) to sell most assets of NB Power to Hydro-Québec. This agreement would have transferred most generation, transmission and distribution assets of the New Brunswick utility to a subsidiary of the Quebec-based Crown corporation, including Point Lepreau, 3 diesel-fired peakers and 7 hydroelectric dams, but was to exclude fossil-fuel-fired plants in Dalhousie, Belledune and Coleson Cove.[7]

According to the memorandum of understanding, Hydro-Quebec would not assume any liabilities with respect to the Point Lepreau refurbishment project.[8] The deal also included provisions to reduce industrial power rates to those paid by Hydro-Québec Quebec-based industrial customers and a 5-year rate freeze on residential and commercial rates.

An economic analysis[9] commissioned by the Graham government to Washington's NERA Economic Consulting estimated that the tentative deal would save New Brunswick ratepayers $5.6 billion over a 30-year period compared to the status quo. The study also showed that residential, commercial and wholesale customers would reap 60% of the savings, but the savings would happen later than the discounts granted upfront to large industrial customers.[10]

The controversial deal was subject to review and approval by the New Brunswick Legislative Assembly.[7] The leaders of both opposition parties in New Brunswick, David Alward of the Progressive Conservatives, and Roger Duguay of the New Democrats, opposed the deal.[11]

Initial reaction

Reception in the press

The tentative agreement between the two governments was initially well received by newspapers, both in New Brunswick and Quebec, before polls showed it to be opposed by the vast majority of New Brunswick residents. The province's three English-language daily newspapers, owned by the Irving's Brunswick News group, welcomed the sale. The Telegraph-Journal saluted it as the "deal of century"[12] while Moncton's Times & Transcript argued that the sale lifted a "big burden".[13] Media critics noted that Irving interests controlled the New Brunswick press outlets that were in favour of the deal and other conflicts of interest were evident.[14]

The province sole French-language daily, L'Acadie Nouvelle, supported the transaction in a nuanced piece, stressing the "political and financial impasse" facing the New Brunswick utility.[15] In Montreal, business columnist Sophie Cousineau of La Presse called it a bold deal providing benefits to both provinces, but worried it would face steep opposition in New Brunswick[16] while Jean-Robert Sansfaçon of Le Devoir stated that the proposed deal provided an initial response to those in Quebec who have expressed concerns about recurring electricity surpluses caused by Hydro-Québec's large dam construction program.[17]

Positions of other provinces
Newfoundland and Labrador premier Danny Williams.

Newfoundland and Labrador Premier Danny Williams was among the first to loudly protest the ceding of transmission lines to Quebec's effective jurisdiction, as he was involved in a longstanding dispute over the development of Churchill Falls and reliable access to NERC Open Access Transmission Tariff (OATT) governed transmission lines to sell hydropower to the United States.[18] Despite assurances by the Graham government, Williams took the position that just as Quebec and its regulatory agencies had permitted Hydro-Québec to interpret the OATT rules in such a way as to monopolize and block transmission via Quebec, it would similarly be possible to block his only other land transmission route via New Brunswick.

Nova Scotia objected on grounds that it had always supported a Maritime regional or Atlantic regional power transmission system subject to a single common set of rules, and that conflicts between Newfoundland and Labrador and Quebec over New Brunswick or otherwise threatened to subject the entire region to American rules administered via NERC especially with regards to OATT tariffs.

Prince Edward Island, wholly dependent on connections to NB's transmission grid, was supportive of the deal.[19]

As all these objections were related to the transmission, distribution and open market operations of the grid, they disappeared in the second deal which regarded only generating assets.

Public debate
Paper mills, such as the J. D. Irving plant in Saint John, New Brunswick are among NB Power's largest customers.

The October 29 memorandum of understanding fostered a spirited public debate in New Brunswick and Atlantic Canada. While the business community's formal representatives were publicly quoted as largely in favor of the agreement,[20][21][22][23][24] reactions to the MOU were hostile. In addition to opposition leaders, a trade association representing independent power generators in New England,[25] Local 37 of the International Brotherhood of Electrical Workers (IBEW), the union representing 2,200 NB Power employees[26] and wind energy supporters[27] have condemned the agreement as detrimental to the interests of New Brunswick. However, in a notable reversal, Maine Governor John Baldacci altered his stance, to say the sale was "a positive step forward" in early 2010.[28]

Opponents in the general public used social media to show their displeasure and contest the various arguments for the deal. On Facebook, 30,000 people joined a group in opposition to the sale within five days of the announcement.[29] A demonstration organized by the group and trade unions drew approximately 600 people outside the Legislative Assembly building on November 17, 2009.[30] A Leger Marketing opinion poll conducted on behalf of Quebecor Media newspapers in November 2009 in New Brunswick and Quebec showed that 60% of New Brunswickers polled opposed the deal, while 22% supported it. The situation was reversed in Quebec, where the deal obtained the support of 55% of Quebecers. Only 14% of those who were polled in Hydro-Québec home province opposed it.[31][32]

First Nations

The status of deals with First Nations, notably Tobique, on whose reserve lands dams had been constructed in the 1950s without a formal written contract, was also problematic. The longstanding arrangement had been that Tobique reserve itself and its residents would not pay any electric power bills whatsoever, forever, and this had been respected at least through 2000. However, after the reorganization of NB Power, there was at least one attempt to bill Tobique residents for power use, indicating that the longstanding arrangement was being unilaterally breached by NB Power's successor corporations. The proposed sales of the dam to Hydro Quebec either under the original deal (to sell all of NB Power) or the second deal (to sell only some generating assets including Tobique) also constituted material breaches of these arrangements, leaving Tobique at least in an unassailable bargaining position to set new terms for access to the river and rights of way used to transmit power from it.

Other First Nations had similar deals, for instance St. Mary's near Fredericton has a similar arrangement which is demonstrated and reaffirmed spectacularly each year by a Christmas light display that people from many miles around come to view. Despite the right to waste large amounts of power, St. Mary's has in recent years moved mostly to LED Christmas lights and other energy-efficient displays and there have been proposals to compensate it for power it has a right to use but is not using, in line with other energy demand management deals elsewhere in North America. A few First Nations have NB Power generating assets on their lands without any benefit to their residents whatsoever, and this has also been a point of debate.

The Tobique traditional council issued its own injunction against any cooperation with the sale of the dam, and the elected band council was prepared to go to court to prevent any transfer of the disputed asset or to back any blockade of rights of way or any effort by the First Nation to reclaim the dam itself. This was forestalled by the collapse of the deal.

Second agreement: Power generating assets only

After two months of controversies, New Brunswick and Quebec representatives signed a second agreement, reducing the scope of the sale. The Globe and Mail and Radio-Canada both reported on 18 January 2010 that the sale would involve NB Power's generation facilities,[33][34] which would be bought by Hydro-Québec for C$3.4 billion. The government of New Brunswick would still own the transmission and distribution divisions and NB Power would enter into a long-term power purchase agreement with Hydro-Québec. The PPA would allow NB Power to deliver the rate freeze for residential and general customers. However, the industrial rates rollback would be smaller than under the original MOU.[35]

Deal falls through

On March 24, 2010, Premier Graham announced the deal had fallen through, due to Hydro-Québec's concern over unanticipated risks and costs of some aspects such as dam security and water levels.[36] However, this interpretation was contested by analysts, who blamed the collapse of the deal on the difficult political situation in New Brunswick, six months before a scheduled provincial election.[37][38]

This dire assessment for the Liberal Premier was confirmed by polling results released one week before the September 27, 2010 election. Among respondents, 38% said their personal opposition to the sale was important to their vote, and this factor was benefiting David Alward's Progressive Conservatives. According to political scientist Don Desserud, the proposed sale and earlier issues gave the public the impression "that this government was doing things that were reckless and without forethought".[39]

gollark: Hmm, this is actually fairly good music?
gollark: ħ.
gollark: ~play haskell
gollark: ~play calculus
gollark: ~p kan181 potatoS

See also

References
  1. nbpower.com: "Annual Report 2009/10", p.11
  2. CBC News (2007-01-24), NB Power plan to burn dirty fuel called 'act of desperation', retrieved 2010-08-25
  3. Linke, Rob (2009-01-21). "Lepreau to miss deadline". Telegraph-Journal. Saint John, N.B. p. A1. Retrieved 2009-11-07.
  4. Keir, Jack (2009-10-05). "Ottawa must come to table". Telegraph-Journal. Saint John, N.B. p. A7. Retrieved 2009-11-07.
  5. Casey, Quentin (2009-10-30), "How accord was reached", Telegraph-Journal, Saint John, NB, retrieved 2009-12-06
  6. MOU between Quebec and New Brunswick (PDF). 2009. Archived from the original (PDF) on 2010-01-07. Retrieved 2009-10-31.
  7. "Quebec, N.B. strike $4.8B deal for NB Power". Canadian Broadcasting Corporation. 2009-10-29. Retrieved 2009-10-29.
  8. "Hydro-Quebec to acquire NB Power assets". World Nuclear News. 2009-10-30. Retrieved 2009-10-30.
  9. Eugene T. Meehan (November 2009). "Assessment of the Rate Impacts of the Memorandum of Understanding Between New Brunswick and Quebec Regarding NB Power" (PDF). NERA Economic Consulting. Archived from the original (PDF) on 2012-11-07. Retrieved 2009-11-18. Alt URL
  10. Bundale, Brent (November 19, 2009). "Report shows power savings". Telegraph-Journal. Saint John, N.B. p. A1. Retrieved 2009-11-19.
  11. Corbeil, Michel (October 29, 2009). "Énergie Nouveau-Brunswick: le protocole d'entente signé". Le Soleil (in French). Retrieved 2009-10-29.
  12. "The deal of the century". Telegraph-Journal. Saint John, N.B. October 30, 2009. p. A8. Retrieved 2009-11-03.
  13. "NB Power sale lifts big burden". Times & Transcript. Moncton. October 30, 2009. p. D10. Archived from the original on March 7, 2012. Retrieved 2009-11-03.
  14. Pedneault, Marjorie (2010-02-20), "Né sous une bonne étoile: le secteur de la presse au Nouveau-Brunswick en est un unique en son genre", Le Devoir (in French), Montreal, retrieved 2010-09-01
  15. Saint-Cyr, Jean (October 30, 2009). "L'audace du changement". L'Acadie Nouvelle (in French). Caraquet. Archived from the original on 2010-01-11. Retrieved 2009-11-03.
  16. Cousineau, Sophie (2009-10-30). "Le mariage de l'audace". La Presse. Montréal. Retrieved 2014-06-13.
  17. Sansfaçon, Jean-Robert (2009-10-31). "Hydro-Québec tout à l'exportation". Le Devoir. Montreal. Retrieved 2010-01-07.
  18. Canadian Broadcasting Corporation (29 October 2009). "Williams lashes out at Quebec-N.B. power deal". CBC News. Retrieved 2009-11-13.
  19. "Quebec-N.B. power deal could benefit P.E.I.: Ghiz". CBC News. October 29, 2009. Retrieved 2014-06-13.
  20. Canadian Press (November 14, 2009). "Irving offers backing to NB Power sale principals". Chronicle-Herald. Halifax. Archived from the original on November 26, 2009. Retrieved 15 November 2009.
  21. Penty, Rebecca (October 31, 2009). "'Unequivocal' support". Telegraph-Journal. Saint John, N.B. p. C1. Archived from the original on July 8, 2011. Retrieved 2009-11-13.
  22. Weston, Greg (November 10, 2009). "NB Power deal boosts industry: Keir". Times & Transcript. Moncton. p. A3. Archived from the original on July 24, 2011. Retrieved 2009-11-13.
  23. Bundale, Brett (November 12, 2009). "Savings offer security: Savoie". Telegraph-Journal. Saint John, N.B. p. B1. Archived from the original on July 8, 2011. Retrieved 2009-11-13.
  24. Conseil du patronat du Québec (October 29, 2009). "Le conseil du patronat salue la transaction historique entre Hydro-Québec et Énergie NB Power" (in French). Montreal. Retrieved 2009-11-13.
  25. Penty, Rebecca (November 7, 2009). "New England's power utilities disconcerted". Telegraph-Journal. Saint John, N.B. p. C1. Archived from the original on November 12, 2009. Retrieved 2009-11-13.
  26. Canadian Broadcasting Corporation (November 13, 2009). "NB Power union slams Hydro-Quebec deal". CBC News. Retrieved 2009-11-13.
  27. Baril, Hélène (November 12, 2009). "Vente d'Énergie NB à Hydro: l'opposition s'accroît". La Presse (in French). Montreal. Retrieved 2014-06-13.
  28. Penty, Rebecca (January 5, 2010). "Power pact 'positive': Baldacci". Telegraph-Journal. Saint John, N.B. p. B1. Retrieved 2010-01-06.
  29. Shipley, David (November 3, 2009). "Anti-NB Power Sale Facebook Group Grows to over 14,000 members". Times & Transcript. Moncton. Archived from the original on July 24, 2011. Retrieved 2009-11-03.
  30. Pollack, John (November 18, 2009). "Hundreds of demonstrators protest NB Power sale agreement at Legislature". Telegraph-Journal. Saint John, N.B. p. A3. Retrieved 2009-11-18.
  31. Léger Marketing (November 22, 2009). "Rapport d'étude: réaction des Néo-Brunswickois à la vente d'Énergie Nouveau-Brunswick à Hydro-Québec" (PDF) (in French). Montreal. Archived from the original (PDF) on 2011-06-17. Retrieved 2009-12-06.
  32. Doucet, Danny (November 23, 2009). "Énergie Nouveau-Brunswick: Hydro-Québec en train de perdre l'opinion publique". Le Journal de Montréal. Montreal. Retrieved 2009-11-23.
  33. Shawn McCarthy (2010-01-18). "In revised deal, NB Power to retain some assets - The Globe and Mail". The Globe and Mail. Toronto. Retrieved 2014-06-13.
  34. Radio-Canada. "Énergie NB : Une vente de moindre ampleur". Radio-Canada (in French). Retrieved 2010-01-19.
  35. Morris, Chris (2010-01-19). "Power deal reworked". Telegraph-Journal. Saint John, N.B. pp. A1. Retrieved 2010-01-19.
  36. CBC News (2010-03-24), "Quebec balked at NB Power sale costs", Canadian Broadcasting Corporation, retrieved 2010-08-25
  37. Cousineau, Sophie (2010-03-25), "Une occasion manquée", La Presse (in French), Montreal, retrieved 2014-06-13
  38. Corbeil, Michel (2010-03-25), "Entente avortée entre Hydro-Québec et Énergie NB: un mauvais calcul politique", Le Soleil (in French), Quebec City, retrieved 2014-06-13
  39. Moore, Oliver (2010-09-20). "Attempted sale of NB Power hurting Liberals in provincial poll". The Globe and Mail. Toronto.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.